Kmart Begins Consumer Dormancy Fee Refunds

A settlement between Kmart and the FTC over Kmart’s gift card has been finalized. This was the FTC’s first law enforcement action involving gift cards. Under a settlement with the FTC, Kmart will publicize the refund program on its Web site. Under the order, consumers must contact Kmart to determine if they are eligible for a refund for any dormancy fee charged. If it is determined that a consumer’s Kmart gift card had a dormancy fee imposed against it, Kmart will mail the consumer a new gift card with a balance equal to the amount deducted in fees. According to the FTC’s complaint, Kmart promoted the card as equivalent to cash but failed to disclose that fees are assessed after two years of non-use and misrepresented that the card would never expire. As of May 1, 2006, Kmart stopped charging a dormancy fee on all Kmart gift cards. (CF Library 3/13/07)

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Smaller Balance Collections Rise in July

A monthly collections industry index increased by 4% in July driven by double-digit sequential improvements in smaller account balances and offset by single-digit declines in larger balance accounts under $3,000. On a year over year basis, the Index rose 12%, compared to a 6.0% decline in the prior month. The SunTrust Robinson Humphrey “Settlement-in-Full Index” reports its metric increased to 76.1% in July, compared to 72.9% in June. Settlements/payments under $500 increased 18% year-over-year in July as settlements/payments between $500 and $1,000 increased 32%; settlements/payments between $1,000 and $3,000 increased 2.6%; and settlements/payments from $3,000 to $7,000 decreased by 1%. The “SIFI” is a proprietary monthly research tool that measures the success of collections agencies in collecting bad debts that they have purchased. The data are based on five agencies including Arrow Financial Services, Oliphant Financial Corporation, Phoenix Credit Solutions, and Zenith Acquisition.

SIFI COMPOSITE
(not seasonally adjusted)
Jan 07: 77.1%
Feb 07: 81.5%
Mar 07: 72.5%
Apr 07: 74.5%
May 07: 83.0%
Jun 07: 72.9%
Jul 07: 76.1%
Source: SunTrust Robinson Humphrey

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JUNE DEBT

Credit card debt climbed again in June setting a new record of A$40.8 billion. However, credit card volume inched up by only 5% compared to one year ago and remains sluggish in the wake of credit card surcharge fees charged to consumers. Credit card debt rose 11%, compared to June 2006. Credit card limits also reached a new high at A$108.5 billion, marking the tenth consecutive month of A$100+ billion. Card volume was A$16.5 billion during June, compared to a previous record of A$17.1 billion set in December, according to the Reserve Bank of Australia. One-year ago credit card debt stood at A$36.6 billion. There are currently 13.5 million credit card and charge card accounts in Australia, compared to 13.0 million one-year ago.

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Gen Y Wants More Than Online & M-Banking

A new study has found that consumers ages 18 to 29 are more likely to choose providers and manage their finances through a mixture of traditional and new methods and not just alternative channels and technologies. The research by Javelin Strategy found that regardless of Gen Y’s proclivity to initiate online transactions and use mobile phones and technology in general, Javelin data shows that Gen Y is not ready to abandon the brick-and mortar, or other channels, to go completely online or to the handset for all their banking needs. Also, as opposed to most other consumers, security threats are not motivators for Gen Y and, while Javelin data show that younger consumers are the most likely to suffer fraud compared to any other age group, Gen Y fraud victims are significantly less likely than other adults to use basic precautions prior to their information being compromised. Javelin noted that in the last 12 months 80% of older Gen Y used an ATM for either a deposit or withdrawal, 59% used an automated telephone system to perform a banking transaction, and 90% visited a branch, demonstrating an apparent demand for multi-channel availability.

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MCHEK/PAYMENTS

mChek has introduced its on-demand payment solution, “mChek/Payments”,
in Sri Lanka for Dialog Telekom and NDB Bank customers. The new
solution enables payment for utility bills/pre-paid top-ups,
over-the-counter
commerce, remote commerce, and mobile banking. The solution also allows
merchants to implement mobile phones as Point of Sale Terminals and Utility
bill payment kiosks. Because of Sri Lanka’s significant cash-based market,
developments such as these are emerging as solutions to utilize mobile
technology that complies with existing banking industry practices,
government
regulations and specifications. Dialog Telekom mobile phones serve over 3.5
Million Sri Lankans.

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Merrick Bank Hits a Ten-Year Milestone

UT-based Merrick Bank, a subsidiary of CardWorks, reports it has hit the ten-year mark serving over 1 million cardholders, has $1 billion in assets, and has become a Top-20 merchant acquirer. Merrick Bank was founded in 1997 and is a premier issuer of non-prime credit cards. Merrick Bank is a top-25 issuer of VISA cards, as well as an authorized issuer of MasterCard cards. Merrick Bank is a Utah Industrial Bank and is a member of the FDIC. The Bank also sponsors 40 ISOs and processes for 150,000 merchants with $20 billion in MasterCard and Visa sales volume. CardWorks is the parent company of CardWorks Servicing (formerly CMS) and Merrick Bank. CardWorks Servicing is a nationally recognized, leading servicer of credit cards, national debit cards, pre-funded cards and other card products.

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I-FRAUD CONCERNS

According to a survey of 1400 British consumers, conducted by
Tickbox.net, 51% of the population are not concerned with Internet
banking fraud and 93% do not feel that it’s a victim-less crime.
Furthermore, the survey reveals that 26% of the population have an
attitude of “these things happen”, 39% are confident that the bank will
reimburse any losses, and 48% feel the risks are out-weighed by the
convenience of online banking. Other findings include that 90% feel they
have taken all necessary precautions to avoid becoming a victim, 24%
desire more education on the issue, 15% of those aged 18-25 feel well
informed on the issue, and 26% of men are confident in their knowledge
of the risks associated with Internet fraud(compared to 14% of women).
In response to these statistics, Lloyds TSB is offering free security
scans, discounted anti-virus software, and tips on protecting their PC
from the company website.

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SIEMENS & ACS

Siemens Traffic Controls has signed ATM distribution agreements with
ACS. The agreement stipulates that ACS will supply and maintain
Siemens’ “Pay and Display” equipment, in addition to their existing
portfolio of parking solutions and equipment. The Siemens equipment is
designed to offer user-friendliness, reliability, and dependable income
with
features including cashless payment by card, solar-powered operation,
foreign language options, a modern user interface and a new physical
appearance. Siemens Traffic Controls designs traffic engineering products
with 700 employees 350 of whom are skilled service engineers. ACS is a
supplier of Transport Revenue systems with 55,000 employees and
revenues of $5.5 Billion.

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SLIM CD Passes its Fifth Annual CISP/PCI Audit

Software developer SLIM CD has successfully completed its annual PCI service-provider onsite audit and has been recognized by VISA for safely handling cardholder information for a fifth consecutive year. The Slim CD Pro package includes a stand-alone desktop application, a web-based virtual terminal, and a shopping cart. The SLIM CD services include gateway services, data on demand, fraud detection services and backup dial-in connectivity. SLIM CD specializes in credit card processing software development for the desktop and the Internet.

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AIRPLUS & UOB CARD

AirPlus International, in conjunction with United Overseas Bank, has
introduced the “AirPlus Corporate Card” for the South East Asia Market.
The card is designed for medium to large scale businesses and offers such
benefits as travel data management, settlement services, and business
travel
solutions. AirPlus has 32,000 corporate customers worldwide, and settles
flight tickets from more than 260 airlines.

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I.C.E Cuts its Loss for 2Q/07

CA-based International Card Establishment reported that net revenues of $2.25 million were flat compared to one-year ago. However, its second quarter net losses was $295,221, compared to a loss of than $3 million for the year-ago quarter. The improved loss was driven by lower General and Administrative costs. The Company says it has been working on forging several strategic alliances with independent sales channels that offer access to a large merchant base. I.C.E. is a provider of diversified products and services to the electronic transaction processing industry. For complete details on I.C.E.’s second quarter performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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